Finding the funding for big tech dreams

Everyone has an opinion on funding options for tech companies

Aasim Saied has some unorthodox ideas about how technology entrepreneurs should fundraise and how best to structure a board of directors. Saied founded Akyumen, a self-described “digital products company committed to opening the door to innovation and advancing access to education through state of the art niche products that bring technology directly to your hands.” Executive spoke with him about raising capital and governance.

E You mentioned barriers of entry to the United States. What are the main or most challenging barriers you have to deal with?

In the beginning the biggest barriers to entry were people. In the US when we spoke to venture capitalist companies, they are the biggest barriers. And in fact we didn’t know better when we were in college about who to go to in order to raise capital. But then, I did meet certain people who told me ‘Venture capitalists are nothing but vultures’. So you go to individual investors, people who understand technology.

E Corporate or individuals?

Individuals. And not go to venture capitalist firms. Venture capitalist firms are the biggest downside of the entire industry. They trick people and take advantage of them.

E In what way?

In every possible way. They in fact, are, pump and dump technologies. I figured it out early in life so I was able to avoid them entirely and challenge them to their face. So we were able to break that barrier, through raising money from individual high net worths and take that approach and get rid of the need for having venture capitalists. That was the first barrier to entry.

E What are the conditions of individual investors? How are they different, in terms of expectations, than venture capitalists?

Individual investors, number one, actually invest in the person, rather than just in the technology itself. Secondly, they understand. They have a want for technology, meaning they like the technology. They invest because they like something. Venture capitalists invest just to make profit. In fact, the individual high net worth investors, they are able to follow you. But venture capitalists, they are like ‘you should follow us’. There’s a difference.

E How do you find these individual investors, these high net worth individuals?

You need let them find you. So what we did was, we did tradeshows. And then we went into colleges and institutions, we asked around, and did it through word of mouth. So through this people came to us. We didn’t have to approach anybody.

E When you raise capital, I totally agree that you first go to private investors who have a high propensity to invest. Call them angel investors. But at a certain size, you need bigger investors to come aboard – institutional investors. Whether you call them VC, PE. Are you still able to dodge these and keep on growing with your individual investors?

We used individual investors to start with and after that we went forward with tech funds, which are different than venture capitalists.

E Tech funds?

Tech funds are totally different than venture capitalists. Technology funds are backed by technology companies who understand the technologies. Venture capitalists are backed by hot air balloons that use other people’s money to invest. Why would we use a venture capitalist firm that uses other people’s money to invest from when we can do that ourselves? However, we did use technology funds at a later stage.

E But these technology funds, are also interested in taking over your business, aren’t they?

Not at all. They sign our documents. We said ‘take it or leave it’. We have the technology that nobody else does.

E Okay. So what’s after that? First there are the initial investors, and then there are the technology funds. What’s next?

The thing is our company works differently. We are not following the same route as others. Our route is, we want to manage to the risk of our investors very well. We have implemented strategies in which our shareholders get amazing returns. In fact, our shareholders would make more than if the same investors put their money in top companies in the world like Apple or Samsung in the public market. They have a much better rate of return because we are a growing company. We are not saturated like others. So because of the possibility of growth and the way in which we structured our business model for them to get returns, they badly want to be a part of us. And also, we are very open-minded and a learning company, meaning our company changes it business model according to trends in the market. We don’t get stuck to just one trend or else we’ll become another BlackBerry. So we have a business model that changes according to trends and we also have several industries spread on our business model, meaning we just don’t stick to one industry. We have over 6 industries that we focus on. So if one industry is going down, another industry is going up. So we have the stability set up within our company. And the investors love it.

E What is your ambition? To become a technology developer or do you want to develop your own devices and compete with the likes of Samsung and Apple… and Huawei, who is now growing very fast?

There can only be two companies: ones that go for a buyout and ones that buy others out. We want to be the company that buys others out. So we have structured ourselves to grow. One reason we don’t want to be bought out is because we have certain technologies that we want the world to have and enjoy. If we don’t do it, nobody else is going to do it. So these technologies are life changing and life saving.

E Are you thinking of going public soon?

We are planning on going public in the future. We want to, but however, I won’t use the word soon. I want to do it right. And our team wants to do it right. It’s all about timing and how we do it.

E For the current ownership structure of the firm, how is the composition of the shareholders today?

We have several shareholders, I hold a majority, and I would say, a lot bigger majority than what Mark Zuckerberg held in his company, and because we don’t use VCs there is nobody who can munch a bigger chunk just to take it public, because we have our strategies that we can do it ourselves.

E But who sits on your board of directors?

Because its private, I don’t want to name drop them. They are big industry experts. And we have four people on our board.

E So it’s a board of four. How big is your investment today?

In terms of valuation we are 9 billion dollar company.

E So $9 billion company and the board is only four people?

Yes. See one of the biggest problems big companies have is they have really irritating people sitting on their boards, poking pins at everybody. From the beginning I made sure we have a board that works together, that understands what we are doing and…

E Is it a board that says what you say or a board that provides you with advice?

A board that jointly makes good decisions and we look at the users’ point of view, the investors’ point of view and the employees’ point of view. We look at all the stakeholders. It’s a very open-minded and working together problem solving board. And, on top, we have a whole bunch of board of advisors who we get advice from to help us make our decisions.

E So it’s a two-tiered type of governance?

That’s right. For example, there are lot of venture capitalists who will come to you and say ‘oh I’ll give you $10 million or $20 million but I want that guy to sit on the board’. I’ll say ‘Great. Give us your money and he can sit on as an advisor. We don’t want them on our board because they are too irritating. That’s how we do it.

E So the board, in your case, is a board of technical people.

No. Each one is an expert in their own industry. A different industry.

E But they are responsible for strategy formulation? The strategy is set up by four people?

Actually the main strategy comes from me and the board members combined, but also the board of advisors too. The advisors come up with a lot of amazing strategies too.

E But they don’t have official duties, the advisors?

No. But, however, we listen to people. For example, if a janitor at the company comes up with a better idea than me, I will take that idea. We will not close the door in anybody’s face.

E And how does this idea make it to the board?

Well, we have a system within our employee pipeline…

E How many employees do you have?

We have close to 120 employees globally. So we have a system for people to give their ideas and not wait too long. It comes into a system where anybody can see people’s ideas or recommendations. Sometimes the ideas are gold, sometimes they are trash, but sometimes the idea that is trash now might become gold later. So we make sure we have a log of everything. And we chose to implement or not implement.

E Who’s on your audit committee?

Well, we have our CFO, we have bookkeepers…

E Any of your advisory committee?

When it comes to your financial side we are very, very strong. The financial arm is the one of the strongest in our company.

E But who oversees….?

Final decisions are made by me, but we have our CFO and a whole line of bookkeepers and accountants who handle things.

E Is there anybody independent that sits there, just to make sure?

No, we don’t want those irritating independent people in our company. We like to make decisions that are appropriate and quick. We are a very strategic company.